Release date: 10 October 2023
Promoter – Financial Intermediary
KCB BANK KENYA LTDLocation
Description
The facility provides funding to KCB Kenya for on lending to limited scale projects undertaken by private sector entities, notably small and medium sized enterprises (SMEs), with a particular focus on projects impacting positively on gender equality and women's economic empowerment, in line with the 2X Challenge Criteria. SMEs play an important economic role in driving growth and creating employment in Kenya, contributing to over 90% of the workforce. However, the the sector development is constraint by access to finance, which is particularly the case for women and other disadvantaged groups.
Additionality and Impact
The project aims to widen access to finance for SMEs and women entrepreneurs throughout Kenya. By providing a long-term credit facility with 50% dedicated to female borrowers, the project will enable improved financing conditions and conducive environment for SMEs and support women's economic empowerment.
In Kenya, while overall access to finance is robust, SMEs remain underserved by the financial sector. Women face additional barriers in access to finance due to lack of collateral. Perceived higher risk and inability to risk price the SMEs during the interest rate cap regime created barriers for the growth of this segment over the recent years. The EIB financing aims to address this financing gap and support a leading Kenyan bank with its strategy to increase its lending to SMEs and women borrowers.
EIB financing is expected to be particularly additional by providing a long-term credit line in hard currency to KCB Bank Kenya, especially considering the ongoing foreign currency liquidity constraints in Kenya. The bank will benefit from improved maturity and diversification of its overall funding base which is otherwise funded mainly by short-term customer deposits. EIB facility will also have a strong signalling effect towards international lenders during market downturn and economic uncertainties.
The project aligns with the strategic priorities of Kenya and the EU by addressing relevant market failures and complementing the overarching objectives such as inclusive growth, affordable finance and women's economic empowerment through the provision of intermediated financing to KCB Bank Kenya which has significant outreach to EIB's target groups. Consequently, the project is expected to contribute to SDG 1 (No Poverty), SDG 5 (Gender Equality), SDG 8 (Decent Work and Economic Growth) and SDG 10 (Reducing Inequalities).
Objectives
This operation is expected to address the financing gap by supporting investments and working capital needs of SMEs with a focus on women-owned or managed enterprises and therewith drive financial inclusion and economic empowerment of women thereby enabling job creation, growth, and improved resilience of SMEs.
Sector(s)
- Credit lines - Credit lines
Under Global Europe NDICI guarantee
Under EFSD+ Guarantee
Proposed EIB finance (Approximate amount)
EUR 50 million
Total cost (Approximate amount)
not applicable
Environmental aspects
Final beneficiaries will be requested to comply with applicable national and EU legislation, as appropriate.
Procurement
Final beneficiaries will be requested to comply with applicable national and EU legislation, as appropriate.
Status
Signed - 22/05/2024
Disclaimer
Before financing approval by the Board of Directors, and before loan signature, projects are under appraisal and negotiation. The information and data provided on this page are therefore indicative.
They are provided for transparency purposes only and cannot be considered to represent official EIB policy (see also the Explanatory notes).